It takes a while for the traveler to get used to Australia. He picks up the phone to call home and can't quite figure out what time it is back in Kokomo or London; then he realizes that he can't call anyone - they're asleep. He reads the news and can't figure out why the paper doesn't report yesterday's stock market close. Then he realizes that back in New York it still is yesterday.
We're writing this on Wednesday morning. But it's still Tuesday afternoon to most Dear Readers.
"I like reading the DR," said an Aussie investor last night, "but what I object to is that it is so long. Couldn't you just save up your thoughts and put them in a simple message at the end of the week? Do you have to make us read so much to get the gist of it?"
Well, today we will keep it short. First, because less has happened - the day is still barely half over in North America. Second, because we have to rush to get on a plane to Los Angeles. And third, because we want to give long-suffering readers a break.
In that spirit, today we pass our own words through a kind of verbiage distillery and drip out the following moonshine:
Stocks down,
Gold up,
Jobs down,
Bankruptcies up,
Rally over?
Don't think so...
Bubbles finished?
Nope, one to go...
*** For those who like a little branch water with their hooch, we offer the following cogitation:
Poor Sam Zell! One of the smartest guys in real estate turned out to be one of the dumbest guys in the newspaper business.
Let's face it, you don't get much prestige grubbing for money in bricks and mortar. Everyone knows it's a grimy trade, dominated by tough old birds with no heart. But newspapers! That's a different story. A newspaper publisher is at the top of the social pecking order...because they can peck anyone they want on the editorial pages. And, heck, they don't admit it...but they can peck on the news pages too. Editorial...news...sometimes you can't tell the difference anyway.
So poor Sam Zell sold out his property empire at the very peak of the bull market...and used his cash to buy the Tribune - publishers of newspapers in Chicago and Los Angeles. He didn't seem to realize that the newspapers were in trouble already - they were losing out to on-line news and opinion publishers. And now, with the falloff in advertising revenue, it looks hopes for a lot of newspapers. In small towns, for example, the local auto dealers took pages of advertising. And the local builders filled the rest of the rag.
But Sam Zell went ahead and bought the Tribune...and maybe he did some pecking...and maybe he didn't get around to it. Because the papers have been in trouble financially since he bought them; that must have taken up his time and attention. And now they've gone broke.
But Zell has plenty of company. More firms are going broke every day. And others are desperately trying to stay in business by cutting payrolls. Sony, for example, announced 16,000 job losses yesterday.
We've done our part to help the airlines...but the industry is facing $5 billion in losses for 2008.
And Paulson has only $15 billion left of the $350 billion first draw for his deflation-fighting campaign. What happened to all that money? Well, it's gone into the pockets of his friends and cronies on Wall Street. Bailouts...loans...nationalizations...that's the way the new system works. The only big money being spent is money that doesn't belong to the people spending it.
*** And the fix is in for Detroit too. At least, that's what it says in the paper...that a "deal is close at hand."
Whew...what a relief. What would we do without GM?
We'd have to buy cars from one of the dozens of other car manufacturers in the world.
We've got more to say...specifically, about "balanced portfolios"...about the next big bubble...and other things. But we have no more time to say them...
So, we sign off for today...
Bill Bonner
The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
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- Trade of the Decade: Sell Stocks and Buy Gold
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- A Simpleton’s Trade: Sell US Stocks and Buy Gold
About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by kathy on 11 December 2008:
I am hearing a lot about buying gold and how cheap it is, problem is in aussy dollars its still at record prices. So do we buy now or wait for the american dollar to drop and hopefully have cheaper gold prices. I love your website but as it is nearly all written in the american perspecitve i have trouble making decisions based on world events.
kate
Comment by Pete on 11 December 2008:
if the USD drops, gold will be more expensive in USD. Not 100% sure how that will work in AUD
Ideally, the AUD would gain parity without a USD drop, then we could buy gold at $800 an ounce, etc (in theory)
Comment by kathy on 12 December 2008:
Yes, so the trade of the decade could still go sour for us if we buy now, however if we don't buy now and the US $ stays strong against the aussy then we miss out as gold goes up and up as our purchasing power goes down.
Comment by Pete on 12 December 2008:
kathy: You are correct in relative terms...but consider a scenario:
[You buy gold in AUD, whilst AUD is trading at 0.65 USD (roughly current). The AUD reaches parity (somehow...), thus increasing your buying power for things priced in USD.
If in the time it takes for the AUD to reach parity, the price of gold has gone up by more than 55% (say from $765'USD to $1185'USD), then you are still ahead.]
Some people speculate that in a few years the price of gold may even rise to as high as $5000 an ounce. That is a 500% increase. That does not mean it will happen, but even a 100% increase is definitely possible. There are a lot of websites advocating gold at the moment, so be careful of being marketed to, but it is definitely worth reading about if you are interested.
Basically you can consider gold in different ways, such as an
1- investment
2- hedge/safety net
3- a waste of time piece of junk jewelry
1)Gold is typically not an investment as such as it does not offer a return on capital - eg, no dividends. If you are speculating however it can offer you a return when traded for higher prices.
2)Gold is considered a hedge, and for people who treat it as such, it does not particularly matter if the price of gold retreats in the short-term because it is treated as a fail-safe for when things get nasty.
3)Some people hate gold, and do not consider it to be even a form of money. Well, news to them, if it can be traded, it is useful as money. Even when governments ban it, it still gets traded on black markets.
A typical investment strategy of the gold enthusiast (and doom enthusiast) is to allocate their 'money' into three things, roughly divided in equal thirds: gold, shares (oil typically) and cash.
That is more or less where I stand, not that I am particularly wise on these matters. If I had a lot of cash at the moment, i'd be trying to buy up some physical gold.